The legendary fund manager Anthony Bolton offered "no excuses" yesterday after his Fidelity China Special Situations fund posted disastrous results. The fund's net asset value dropped 29 per cent in the six months to the end of September. The return was worse than its benchmark MSCI China index, which fell 25 per cent.

Meanwhile the investment trust's share price slumped 31 per cent over the period. Mr Bolton said it had been "as difficult a time to be running money as I can remember". He added: "The few weeks leading up to the end of September have been a brutal period for Asian markets."

The fund was launched on a wave of optimism in November 2009. Then Mr Bolton came out of retirement for what he said was "an almost unprecedented investment opportunity". He believed then that China was in the first year of a multi-year bull-run.

Yesterday he admitted his optimism on China "has been severely tested". The problems, according to Mr Bolton's report, included food inflation, bad bank debts and falling house prices. But he said he would persevere with his strategy of picking smaller firms and seeking stocks that should benefit from China's move from a low-cost manufacturing economy to one more reliant on consumer spending.

Managing a fund that performed worse than its index was a consequence of investments that were "geared" to the market, Mr Bolton said. However, he was caught out earlier this year when the fund lost money in two Chinese companies that were later accused of fraud.

It is a far cry from the consistent average annual returns of about 20 per cent Mr Bolton managed over 28 years while managing the Fidelity UK Special Situations fund.

But he managed a note of optimism yesterday, saying: "Over and over again I have asked myself whether I should revise my view in light of the deteriorating position in Europe and potentially also in the US, but I have concluded that the world is not in such a bad position as many think."